Battling for business in a local community

The South East has always been renowned for its diversity given the size of the region, which includes counties such as Kent, Surrey and East and West Sussex, to name but a few.

With such a large number of towns and cities in the region, its insurance market has seen drastic change over the years, but is also flourishing from being part of one of the most prosperous regions in the UK.

According to those who work there, the region has three main centres – Maidstone, Croydon and Redhill. Beyond them, seaside towns including Brighton have added to the variety of business that is sought after by brokers.

The region lacks a central heart of insurance, but brokers insist that this has created a much closer local broking community. Local brokers have become central to the trading that takes place, and still offer fierce competition to national brokers and consolidators. Many other regions have seen the number of independent brokers decrease over time. However, the South East has managed to remain a hotbed for provincial brokers and this is particularly evident in most Kent towns.

Maidstone has a large broking community ‘ ‘ that includes a strong mix of local brokers and global brokers such as Marsh and Willis, and is home to the Towergate Partnership.

Jeremy Trott, branch manager of Allianz Commercial in Maidstone, said the office deals with up to 70 brokers in the South East region.

“Maidstone and in and around Maidstone is probably the most consolidated area,” he says. “The major changes in broker consolidation and brokers merging has been the biggest over the past 25 years. Even regional brokers in the South East have bought other regional brokers.”

West Malling-based broker Aston Scott has acquired a number of firms in Kent and Surrey and is seen by many as a major competitor for business in the region. Another broker, Green Insurance based in Hastings, has also expanded its presence in the South East and has offices in Bexhill, Crowborough and Eastbourne.

In February, Maidstone broker Woodgates was acquired by Towergate. John Harrison, chief executive of Woodgates, says the £8m gross written premium (GWP) broker has changed its focus and is now a Lloyd’s broker dealing with specialist schemes. He says local, traditional business now accounts for only around 15% of its overall book, after expansion outside the region – a move that Harrison claimed “any successful broker has done”.

“There are some small brokers that have concentrated on keeping stuff local, particularly the east Kent brokers,” he says. “The further east you go, the more those brokers will do local business. We are more west Kent and we have links to the M20. There is now a lot more appetite for spreading business across the home counties.”

He says the competitive market in the South East has limited opportunities. He explains: “There are so many brokers fighting over local business that it rather cuts your options. A lot of those companies are being eaten up by bigger companies, and those that are not based in Kent might have divisions in Kent, but actually the decision makers are based elsewhere, and that has happened a lot.”

But he says that the Kent broking market has always been respectful of the competition. “There is an understanding between brokers in Kent,” he says. “No one goes high tailing it after each other; it is a reasonable community and a good mix of business.

“All the managing directors know each other and there is no one company that has got big growth requirements, so they don’t trample over anybody else. I don’t think there is much of a bun fight.”

“There are some small brokers that have concentrated on keeping stuff local, particularly the east Kent brokers.

John Harrison, Woodgates

While the number of insurers in Maidstone has dwindled, the town still has a strong broking presence.

In 2006, AXA closed its Maidstone office. Harrison admits: “AXA moved to Redhill and we don’t see it as much and probably don’t do as much business with it as a result.”

Allianz’s Trott says the company has won more business as a result of other insurers that have closed offices.

“It is really important to develop our broker relationships. We have benefited from others because we have gone in there and won business, and said we are local and have picked up where others have pulled out,” he says.

Mark Allen, commercial underwriting manager for Ace in Maidstone, agrees that the market still has an appetite for local trading. “It is a traditional broking market with a broad spectrum of brokers,” he says. “Relationships remain key in what we are trying to achieve here.”

Tony Simper, managing director for personal lines broker Woodstock Insurance Brokers, says Maidstone was once one of the largest insurance centres in the UK.

“Maidstone used to be a huge Mecca for insurance,” he says. “All [insurers] were here but they have all gradually moved out now. It was a huge area for insurance and they all had big offices.”

Two of the most common lines of business in the South East are fleet and construction, with business driven by the region’s access to the Continent via the Channel tunnel and ferry links.

David Parker, branch manager at ABC Insurance in Maidstone, says the South East has long been seen as the powerhouse of the UK economy, with many firms moving their businesses down to the region.

He says: “Kent, as one of England’s largest and most populous counties, remains at the forefront and with the advent of the Channel tunnel, is very much the gateway to and from Europe for both businesses and individuals.”

He adds that many brokers had benefited from picking up new business as a result.

Woodgates’ Harrison thinks many firms in Kent have been boosted because of its close links to London.

“A lot of companies benefit from London overspill,” he explains. “There are a lot of people that have set up small but quality brokers in Kent. The expertise in the area is very good.”

“[Brighton]is a vibrant place for new business and it has a lot of new quirky business.

In East Sussex, Brighton rules the insurance roost. Despite a dwindling number of brokers and only one notable insurer presence in Norwich Union, the market is still lively.

“It is a vibrant place for new business and it has a lot of new quirky business,” says John Mewse of George Baker insurance, a 78-year-old business.

A number of established brokers have dominated and continue to control the market in Brighton, many of which were originally personal lines brokers, but have since committed to commercial lines.

DF Edmunds & Co, a Brighton-based broker since 1972, is one such broker. Managing director Alan Hemsley said the business still has many clients that wanted to deal with a local broker, and some of those clients had been on the books for 30 years.

DF Edmunds joined the Broker Network last year, and Hemsley said the move had given the business the “clout of a national broker”.

He says: “A lot of insurers had the attitude that they did not want to do business with people that were not supplying the business. Going back 10 years, all the insurers were in Brighton. It has made us look at the markets we deal with. A lot of our business used to be done with people we had relationships with. We don’t see people from insurers like we used to.”

The business is now set to rebrand following a merger with another local broker, Grant Smith. The new business has been named Brighton Insurance Brokers, a name which Hemsley hopes will continue a legacy of local business.

Brighton is also conveniently home to Navigators & General, part of the Zurich group. Simon Tonks, development manager at N&G, a specialist in marine insurance, said the South East was the hub of the marine industry.

“Employment in the marine business is largest in the South East,” he said. “That shows the importance of being down here. We will always be based in Brighton.”

He believed that out of the dozen major marine brokers in the UK, up to half were based in the South East. But there were also many brokers with small marine books.

Hemsley says: “Commercial brokers in the South East are likely to have some marine on their high-net worth business and by default they develop a marine book of business.”

Business in the South East appears to be plain sailing. IT